Thousands of Wal-Mart investors and employees will pack a northwest Arkansas sports arena Friday for the giant retailer's annual shareholder meeting, a mix of music celebrity flash and serious business with a pinch of criticism from dissident shareholders.
Investors will be closely watching the presentations by Chief Executive Lee Scott and top executives for word on growth strategies after the company warned second quarter profits may miss Wall Street expectations.
The global retailer typically packs the 18,000-seat Bud Walton arena at the University of Arkansas in Fayetteville, about 30 miles south of Wal-Mart headquarters in Bentonville.
Activist shareholders ranging from religious orders and unions to a free-market think tank are offering 11 proposals. Such measures typically fail to win majority support.
This year's proposals include calls for Wal-Mart to report on the gap in pay and benefits between its top executives and lowest paid workers, on the percentage of stock awards to employees based on gender and race, on the need for universal health care plans and on the grounds for its charitable giving.
It is always a well-choreographed event with a sprinkle of big-name performers to serenade the audience. Recent years included stage appearances by Garth Brooks, Jon Bon Jovi and Jessica Simpson.
At the shareholder meeting and at an analyst conference immediately afterward, analysts will be listening for any news on Wal-Mart's growth strategies for its core U.S. namesake stores, whose sales dwarf its faster-growing international business and its Sam's Club membership warehouse chain.
"What everyone is wanting to hear is that they are going to get it right on fashion and they're going to get it right on home (decor)," said Patricia Edwards, a portfolio manager and retail analyst at Wentworth, Hauser & Violich in Seattle, which holds about 42,000 Wal-Mart shares.
Apparel and home furnishings are two areas that Wal-Mart has identified as its weakest, weighing down sales gains in electronics, food and pharmacy.
Wal-Mart is trying to find the right balance between low prices and adding more brand names to departments like home electronics after a brief foray last year into higher-end fashion brought disappointing results.
Wal-Mart's sales at established U.S. stores, a key retail benchmark, have been trailing those at smaller rivals like Target Corp. and fell in April by 3.5 percent, the worst showing in at least 27 years.
Wal-Mart warned this month that earnings in the second quarter might fall below analysts consensus of 79 cents per share as it offers more discounts and as high gas prices take cash out of the pockets of its core lower income shoppers.
A.G. Edward & Sons retail analyst Robert Buchanan said he would like to see the company trim its longer term earnings guidance to reflect what Buchanan calls a more realistic level for a retailer that has grown into the world's largest company by revenues.
Buchanan said many analyst estimates reflect expectations that Wal-Mart will continue growing profits at past levels of 11 to 13 percent per year, but that he believes 8 percent is more realistic for a mature company.
"This company is huge...It's very, very hard to grow at anything approaching the historical high rates," Buchanan said.
Wal-Mart expects earnings this year of $3.15 to $3.23 per share, up between 8 and 11 percent from $2.92 in its last fiscal year, which ended in January. On average, analysts surveyed by Thompson Financial expect an 8 percent increase to $3.16 per share this year and another 11 percent to $3.51 next year, while Buchanan sees just a 7 percent rise next year.